November 22, 2016

Why licensing is ideal practice for manufacturer?

Toy manufacturers are facing a catch-22 situation due to entry of global market in market and the consistent pressure tending them to reduce price. However, licensing is a brilliant way-out for toy manufacturers says Vikram Goel, the owner of Infotech Resources.Given the intense competition in toy industry and entr...

By Shipra

Toy manufacturers are facing a catch-22 situation due to entry of global market in market and the consistent pressure tending them to reduce price. However, licensing is a brilliant way-out for toy manufacturers says Vikram Goel, the owner of Infotech Resources.

Given the intense competition in toy industry and entry of global brands in market; local toy manufacturers’ are looking at various methods to increase sales of their products. However, they are somehow caught with only one methodology enforced by dealers –REDUCE YOUR PRICE.

Considering the ground realities, it is not a viable option for manufacturers to reduce price of a particular product below a certain point due to quality constraints, else the quality suffers.

In this case, a methodology that attracts a consumer to have hands on the product, is to establish connect between the target audience i.e. child and the product. This connect is generated when a Superhero or a licensed character, which the child adores and correlates to, is there on the product. For instance Motu Patlu, Doraemon or Batman have that instant connect with the consumers.

If a manufacturer prints these characters on the product, the child is attracted to the product and pushes the parents to buy that product, purely due to the character’s appeal.

Premium pricing: Licensing not only helps manufacturers sell the product faster, but also they can draw a premium pricing from the dealer, as the product is quick to sell. Moreover, the customers are pretty okay to shell out some extra bucks for original licensed products.

Quality assurance: Working with a licensors comes with a set of guidelines, quality being of paramount importance. When a manufacturer is a licensee, he can be assured that customers won’t doubt the quality, reason being the licensing agreement wherein licensors emphasize on high quality.

Lesser competition: Branded and well established manufacturers’ can generally afford the licensing fees. This helps them standout from other small players, when the products fight for shelf space at the retail end.

Easy access to large retail chains: Often manufacturers’ find it difficult to enter large retail chains like Shoppers Stop, Crossword, Hamleys’ etc. But when they approach with licensed products, it attracts the larger chains, and often helps them make a break through.

For instance, Green Gold, license holder for Chhota Bheem, has established specialised retail stores that sells only the licensed Chhota Bheem products. Manufacturers having Chhota Bheem license, therefore have another retail chain, through which they can sell their products.

Companies which own the Character License, like Disney, Warner, Green Gold are continuously spending large sums of money on publicising their characters, and organizing events, to retain and build the connect of the kids with the characters. Manufacturers’, who buy the license get benefited by the publicity spends of the License Holding Company.

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